Microgrid Growth in 2016

Supplying diesel fuel energy to the front lines of U.S. Military operations can cost as much as $400 per gallon. It’s also one of the most dangerous assignments for military personnel. That’s two good reasons why all military bases will eventually become microgrids. Add the fact that the U.S. Military has the largest greenhouse gas footprint on the planet and we’re talking a win-win-win argument in favor of microgrids that appeals to policy makers across the political spectrum. (1)

Microgrid Opportunities

Are there more commercial reasons that investors should consider microgrid growth as an investment opportunity? Yes. Both mature and emerging economies will make billions of dollars of upgrade investment in their electric grids over the next 15 to 20 years, so microgrids can be thought of as building blocks to a smarter energy system. Some examples of estimated costs are sobering: U.S.: $1 trillion by 2035, South Africa: $15 billion by 2022, India: $1.25 trillion by 2035. (2)

The number of extreme weather events is increasingly a problem for the bulk power grid system. The effects of December’s unprecedented storms across the southern United States included widespread reports of power outages. Higher average temperatures make storms more powerful and increase the amount of water vapor the atmosphere can hold. Microgrids can increase resilience to the impacts of Climate Change by distributing power from locally managed grid systems.

Finally, Solar PV and Wind Farms accounted for about 70% of new power generation in 2015. (3) Renewable energy resources have become some of the least expensive for generating reliable power, and microgrids provide communities and businesses the opportunity to opt out of using existing utility infrastructure.

Advisors and their clients would be wise to consider microgrids as part of their long term growth investment allocation in 2016. There are a number of Exchange Traded Funds (ETFs) available on many broker-dealer platforms that allocate assets according to an index of companies that build, own and operate microgrids in the U.S. or globally.